The increase of imports from China in the US and the bilateral trade imbalance is largely the result of the shift of production facilities from other, mainly Asian countries to China. Since 1990, the share of US imports from China has soared sevenfold to 26 percent. Today, China is the center for global supply chains, which has greatly lowered US multinationals’ costs and thus prices for US consumers. Den Rest des Beitrags lesen »

Major changes in oil production have transformed the US from a major importer to a major producer and sometime exporter of oil.The market power of OPEC and its non-member collaborators has been weakened (Libya and Nigeria have been exempted from current quotas). In addition to new sources of oil production, we are now hearing increasingly about limits to oil demand and when the peak oil DEMAND will be reached(Bloomberg). Increased production and trade in natural gas and growth in renewables decrease the demand for oil. The timing of peak oil demand will depend on improvements in batteries that power electric cars (Covert et al). Although batteries continue to limit the range of electric cars, auto producers, such as Volvo have recently made major commitments to introduce electric models. Volvo will phase out gas cars and go all electric or hybrid by 2019 (Wall Street Journal 2017a). India has announced that the nation will go all electric for new car sales by 2030(CNN). The result of fast growth in oil supply and slower growth in demand has been persistently low oil prices since December 2014.

One of the “consensus views” drawn from the hard lessons of the global crisis exploded in 2008 is that in Europe, and in the Monetary Union (EMU) in particular, the crisis was exacerbated and prolonged by some deficiencies in the original design of the EMU as a supranational institutionwith the overarching purpose of generating and distributing collective benefits from integration and policy coordination (e.g. Baldwin and Giavazzi (eds.) 2015, 2016). The most prominent problems brought to the forefront by the crisis are two. The firstis that the system fails to prevent member countries from pursuing policies in the pure national interest notwithstanding social and economic costs due to mutual negative spillovers(what game theorists call “non-cooperative policies”). The second is that no one thinks for the EMU as a whole at the supranational level either(with the exception, by statute, of the ECB); the EMU is just the statistical average of what the single countries are doing. Therefore, another element in this consensus view is that, in order to overcome the flaws emerged during the crisis, institutional reforms are necessary which should ideally be aimed at fostering integration on the grounds of economic policy and governance (see the so-called ‘Five Presidents Report’ (Juncker et al. 2015), and the Commission’s White Paper about the future of the EU, 2016). Den Rest des Beitrags lesen »

The destination based cash flow tax (DBCFT) with border tax adjustment (BTA) as outlined in the so-called Ryan blueprint[1] (named after its main proponent Rep. Paul Ryan) is perhaps the most exciting policy proposal of the last decade– and it is certainly the least understood. There is a wide variety of contradictory claims concerning the DBCFT’s effects on behavior and distribution. Whereas proponents hope that the DBCFT could end multinational firms’ tax avoidance activityonce and for all, its opponents fear a disruption of trade, price hikes[2] and other problems. President Trump himself has sent ambiguous signals with regard to the policy proposal. After expressing his sympathy for fundamental tax reform during the campaign, he has revealed doubts about the Ryan blueprint in an interview with the Wall Street Journal. Specifically, he suspects that the border tax adjustment implies that the US is “adjusted into a bad deal” and that it is “too complicated”.[3] More recently, he seems to have switched back to a more favorable opinion while his advisors are apparently divided over this issue.[4]

China, with its staggering population of over 1.4 billion, has more internet users than any other country in the world. More internet users translates into more ecommerce shoppers, making China the largest and fastest-growing ecommerce market in the world.

With $630 billion in sales in 2015, China’s ecommerce market dwarfs all others, being almost 80% larger than the United States.

In fact, ecommerce accounts for 13.5% of total Chinese retail spending, which is the highest percentage of any large economy except for the United Kingdom. Clearly China is experiencing a massive boom in online shopping an ecommerce.

The volume of online sales in China now exceeds that in the US, and online sales are expected to grow 20% annually by 2020. Furthermore, online shoppers represent the vanguard of China’s growth story, since they tend to be young, urban, and highly educated. They have a different attitude toward shopping than older generations, which were shaped as savers by more challenging political and economic circumstances. Younger shoppers are more willing to spend. Den Rest des Beitrags lesen »

Low interest rates, continuing injections of liquidity by the European Central Bank (“ECB”), fiscal stimulus to varying degrees assisted by low government borrowing costs, a fall in the Euro and sharply lower energy prices are hiding deep-seated and unresolved problems in Europe. Despite the ongoing Greek drama which is incapable of resolution, the European crisis is moving closer to the core. Italy and France may be the next dominoes to topple.

While the near term focus is political, the French and Italian election, any new government will face a series of problems that cannot be easily resolved, even if there is the will to tackle the political and economically difficult issues.

The Unthinkable…

Defenders argue that Italy and France are large modern nations, with enviable economic pedigree. Italy and France are amongst the largest economies in the world.

Gross domestic product (“GDP”) per capita in 2015 is estimated at around US$35,000 and US$43,000. They have large populations, well-educated and productive workforce, well developed infrastructure as well as considerable economic and social capital. Both countries are major agricultural and industrial powers, strong in advanced technical products, luxury goods, food processing, pharmaceuticals and fashion. Both are major exporters and significant tourist destinations. France even has a favourable demographic outlook, with a birth rate just above replacement level mainly among its immigrant population. They are simply too large to fail.Den Rest des Beitrags lesen »

In addition to increasing temperatures and rising sea levels, global climate change represents a complex exercise for the great majority of businesses, which must frame the meaning, the costs, and the business and investment opportunities associated with this ongoing phenomenon.

For a large number of companies, action on climate change is embedded in some version of a “sustainability” or “green business” program aimed at improving environmental and business performance. These initiatives are typically focused on mitigation, or the reduction of greenhouse-gas emissions, rather than on building climate resilience in the face of risks such as cyclonic winds, heat waves, flooding and storm surge, and drought. The most effective of these sustainability programs, by whatever name, manage to reduce emissions and lower the environmental footprint of companies and their supply chains, by using renewable energies such as solar and wind power, improved energy and water efficiency, recycling, and reducing waste of all types. Companies that use these programs are viewed as responsible environmental stewards, and at the same time, reap the benefits of process efficiency and lowering their costs, as illustrated in the 2013 book, Eco-Business: A Big-Brand Takeover of Sustainability. Den Rest des Beitrags lesen »

The next wave of smart technologies—from the Internet of Things and wearables to robotics, and artificial intelligence—will boost worker productivity, reinvent business, and add trillions of dollars to worldwide GDP growth. Research recently conducted by Roubini ThoughtLab and Cognizant’s Center for the Future of Work estimates that these smarter technologies will turbo-boost the digital revolution and rewrite the next chapter in the story of business – how companies generate revenue, control costs, engage customers, and manage work.

Our study, The Work Ahead, reveals that companies are rapidly moving from the initial phase of digital transformation, spurred by SMAC technologies (social, mobile, analytics, cloud), to a second phase of hyper-digitization. In this next phase, which will carry us into the next decade, businesses will harness these smarter, game-changing technologies to become hyper-digitalized organizations that will enjoy leaps in revenue growth, cost savings, productivity and worker engagement. Den Rest des Beitrags lesen »

Key takeaway – Across the globe, populism and protectionism are on the rise and macro fundamentals remain weak. In this challenging context, growth will remain subdued in 2017, hampered by sluggish investment and productivity, ever-accumulating savings and modest inflation. With the exception of the Unites States (US), developed markets (DMs) will stagnate, burdened by debt and structural rigidities.In the US, if Trump’s policies veer toward pragmatism, the economy will grow above trend, lifting financial markets, especially in the first part of the year. Emerging markets (EMs) will face low growth and risks of political volatility. At the global level, geopolitical tensions, financial instability and competitive devaluations remain key risks. Fiscal and monetary policies are unlikely to strengthen demand and investment; fiscal policy might turn expansionary only in the US. Monetary policies, unable to spur growth, will steadily diverge – with a mild tightening cycle in the US and easing in the Eurozone (EZ) and Japan. While traditional banks remain under pressure, asymmetric economic performance and diverging monetary policies will increase the risk of market dislocations. Unusual times call for unusual portfolios: investors should lower their return expectations, and increase exposure to alternatives. Den Rest des Beitrags lesen »

After the UK Brexit and the Trump triumph in the US, the rise of anti-establishment Italy is hardly a surprise. It is the effect of half a decade of failed austerity doctrines in Europe and decades of failed political consolidation in Italy – ever since the notorious Tangentopoli scandals.

While Italy’s constitutional referendum heralds a political earthquake that will eventually affect both France and Germany, the immediate result is more uncertainty in economy, political polarization and market volatility.

End of an era in Italy – and Europe

Only hours after Italians had casted their ballot in the referendum on constitutional reforms, Prime Minister Matteo Renzi announced his resignation after heavy defeat.

Renzi’s ‘Yes’ camp included most of his Democratic Party (DP) and centrist allies, and the tacit support of moderate voters, including some from Silvio Berlusconi’s Forward Italy (FI). In turn, the opposition lineup featured Beppe Grillo’s Five Star Movement (M5S), the regional Northern League (NL) led by Matteo Salvini in alliance with the far-right Brothers of italy’s (Fdl) and Berlusconi’s Forward Italy (FI), a significant minority of PD allies, a number of small leftist groups,

According to projections, almost 60% of voters rejected constitutional changes. “My government ends here,” said Renzi from Palazzo Chigi. Moments later, he acknowledged that his pledge to resign if defeated at the polls had been a mistake. Den Rest des Beitrags lesen »